INSIGHTS
Douyin E-commerce: New Opportunity for Brands
BY Ye ChenJan 25, 2021
As one of the Top vlog platforms in China, Douyin (Chinese version of Tik Tok) has expanded its business to e-commerce. Douyin has launched the Douyin Store function and will also develop its Cross-border e-commerce platform shortly. This article will elaborate Douyin Store's system and Douyin's CBEC business's current status.

Douyin (Chinese version of Tik Tok) is the Top vlog platform in China. Official data shows its daily active users already reached 600 million in 2020.1 Owning one of the largest traffic pools, ByteDance, the parent company of Douyin, didn't want to rely solely on advertising to achieve profits. E-commerce is another field that ByteDance intends to explore.

The history of Douyin e-commerce

  • 2018

Douyin started its e-commerce business in March 2018 by making an e-commerce deal with Taobao. A shopping cart icon was added to Douyin's user interface, linked to the brand's product page on Taobao. In this same year, Douyin opened and set up its own e-commerce store, Douyin Store, which later became the most critical e-commerce channel on Douyin.

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Function: Shopping cart

  • 2019

Douyin allowed personal accounts to open Douyin Stores.

  • 2020

Douyin made the next move to build its independent e-commerce circle, cutting its reliance on third-party platforms, such as Taobao and JD.com. In June, ByteDance established an e-commerce business unit and recruited a large number of e-commerce experts. In August, Douyin announced it would gradually cut ties with third-party platforms such as Taobao and JD.com on Douyin's live-streaming channel. In this same month, ByteDance got a pay license (Like Alipay, Apple Pay) by acquiring another company, Union Life.

On November 12, 2020, ByteDance applied for a new trademark, Douyin E-commerce, implying ByteDance's latest move in the e-commerce field. 

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Douyin E-commerce Official Website

All these actions show DyteBance's ambition to build another e-commerce empire in China through Douyin. As a growing business, Douyin e-commerce did achieve excellent performance in 2020. According to the latest data from Douyin, from January to November 2020, the overall GMV of Douyin e-commerce has increased by 11 times. Among them, the GMV of Douyin Stores has risen by 44.9 times, and the number of newly opened stores has risen by 17.3 times. 2

It is also good news for many brands, especially small brands. Mature e-commerce platforms, such as Taobao and JD.com, are prone to direct traffic to big brands because of the 80/20 Rule (The 80/20 rule, states that for many phenomena 80% of the result comes from 20% of the effort. On the e-commerce platforms, this rule represents that 80% resource will be given to Top 20% brands.). However, emerging platforms, such as Douyin e-commerce, would be more likely to support new and small brands when Douyin itself is in the initial period. But how should brands grab this opportunity? There are two ways: Douyin Store and Cross-border e-commerce. 

Douyin Store

As a content-based platform, Douyin runs its stores differently Tmall and JD. Three parts play an essential role in one store's success, the brand's store itself, its official Douyin account & its link accounts, and KOL accounts. 

First, merchants need to open a Douyin Store. Besides selling products, a store needs to offer logistic services and customer services. Douyin now has a much higher requirement for Douyin Stores than before. For example, Douyin requires merchants to deliver the goods in 48 hours after consumers place an order. In the meantime, Douyin launched policies like unconditional returns policy within seven days, fake one compensation three, and consumer protection services. The consumer evaluation system has also been into effect.

Second, brands also need to register their official account and other link accounts to drive traffic to their store. These accounts all have the window function on their main page (Window (橱窗): like many offline stores' window, the window function of an account is to display and sell products). The account can display and sell products from a store in its window by linking to this store.

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Function: Window

Also, the official account and other link accounts usually have different marketing functions. The official account's primary function is to show the brand story and brand position. Other link accounts can be less unofficial and have different personalities. Taking Xiaomi as an example, Xiaomi Live-streaming (小米直播间) is the official account of Xiaomi Douyin Store. Besides, many other accounts are linked to this store, including Lei Jun (雷军), the official account of Xiaomi's founder), Xiaomi Phone (小米手机), Call me Xiaomi's home (请加我小米之家 this account positions itself as the store manager of Xiaomi) and others. All these stores' windows show and sell products from Xiaomi Douyin Store, effectively driving conversion for the brand.image007.png

Xiaomi’s official account & other link accounts

Third, leverage the power of KOL endorsement. Merchants can invite KOLs to promote their products through two channels, Star (巨量星图) and Jingxuan Lianmeng (精选联盟). After making a deal through these two channels, KOLs will add merchants' products in their accounts' window, thus directly driving traffic to the store.

Therefore, each step is indispensable for a smooth entry and brilliant performance on Douyin, from building a high-quality store and providing good products and services to developing a high-quality official account and other link accounts and cooperating with proper KOLs on Douyin.

Cross-border e-commerce

While Douyin Store is more suitable for domestic brands and international brands that have already entered Chins through the general trade, Cross-border e-commerce (CBEC) is ideal for imported brands whose products haven't entered China through the general trade. Cross-border e-commerce refers to a business that transaction entities belonging to different borders use e-commerce platforms to complete transactions, make payments, and deliver goods through cross-border logistics. In China, products are usually stored in the bonded warehouse before consumers place orders rather than delivered from overseas after placing orders. Promoted by tech, policies, and e-commerce companies, CBEC has been a thriving business in China, with Tmall Global as the largest marketplace.

Douyin also has expanded its business in this area. In August 2020, ByteDace released a test product named "Fuxiang Overseas (福巷海购). " It was a CBEC applet (mini-program) on Douyin. In November 2020, Douyin launched a big-scale survey of CBEC merchants on Douyin. Some sources have also claimed that Douyin is building bonded warehouses in many cities, including Ningbo, Guangzhou, Hangzhou. Multiple sources have confirmed that Douyin is conducting a closed beta of a CBEC platform. Recently, Douyin e-commerce also launched a CBEC column in the merchants' dashboard. All the news show that Douyin's CBEC platform is on its way.


From the above introduction, we could see that Douyin e-commerce is a growing business, making it a good choice for niche brands since they can avoid big brands' intense competition on mature e-commerce platforms and get traffic support from Douyin. Also, the Chinese government recently launched a series of official statements about antitrust to protect fair competition and even punished some famous e-commerce companies in China for this reason, including Taobao and VIP.com. It is undoubtedly good news for new e-commerce platforms such as Douyin. Douyin, which would instead give up part of its advertising revenue to build a good e-commerce environment, is demonstrating its commitment to e-commerce business. ChemLinked believes that Douyin E-commerce will unleash more dividends in the future.

Ye Chen
ChemLinked Research Analyst
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